A conversation with Adam Stein, Vice President for Marketing of Terrapass, and Tom Boucher, President and CEO of NativeEnergy.


Car Talk: : So... let's accept that global warming is caused by greenhouse gasses, chief among them carbon dioxide. Cars emit carbon dioxide as part of their emissions... so cars are a part of the global warming problem. How much CO2 do cars emit?

Adam: Burning one gallon of gas creates 20 pounds of carbon dioxide, and the average car emits about six tons of carbon dioxide every year. But averages don't tell you much about your own carbon footprint, which is as personal as your fingerprint. What you drive, how you drive, and how much you drive all make a huge difference. Some people reliably get 58 miles per gallon in their hybrids, which perform best in city driving. Others like to peel out of stoplights in their Maseratis, and they're lucky to get eight miles per gallon.

 

 

Car Talk: How does that stack up against heating our houses, flying to Wichita for the annual gopher herding festival, or that deluxe hot tub with turbo jets that most of us secretly covet?

Tom: Heating a house produces about four tons of carbon dioxide per year on a national average, in addition to eight tons for electricity use.

Flying non-stop round trip from Boston to Wichita creates about 1,400 pounds of carbon dioxide emissions, but the total impact is actually twice that, due to other gases, the contrails, and the altitude at which the carbon dioxide is emitted.

Adam: That hot tub, I'm sorry to say, ranks somewhere between the Charles River and Three Mile Island in terms of environmental disasters. The only things worse are plasma TVs.

Car Talk: Plasma TV's? Really?

Adam: Well, a plasma TV isn't quite as bad as a hot tub, but, of course, there are lot more plasma TVs out there. A large-screen plasma can suck the same amount of juice as a big refrigerator. When Los Angeles experienced blackouts last summer, one of the culprits was plasma TVs. The utilities underestimated the demand for electricity, because they didn't factor in how much more power-hungry consumer electronics have become.

Let's run through a few numbers. According to Nielsen, in the average home a television is on for eight hours every day. A plasma TV can draw 400 watts of power. That adds up to about 1,500 pounds of carbon dioxide over the course of a year.

Tom: The average hot tub, on the other hand, uses about 2,300-kilowatt hours per year, producing more than 3,000 pounds of carbon dioxide. Tell us again where we're supposed to ship that deluxe test model? What do you guys do with all that stuff people send you, anyway?

 

Car Talk: That's proprietary corporate information I'm not inclined to disclose. Care for a hand-rolled Cuban cigar?

Tom: Why, thank you. I'll keep it in NativeEnergy's memorabilia museum - we really do need to minimize unnecessary carbon dioxide emissions.

Adam: Excellent aromatics with a fine aftertaste. I like it.

 

 

Car Talk: What does it mean to offset the carbon dioxide that's emitted by your car?

Tom: Think of offsetting as a counterbalance. You're simply taking an extra step to reduce your impact on the environment. Assuming you need to drive, you can't stop your car from emitting carbon dioxide. But, you can fund the construction of new, renewable energy projects that will displace carbon emissions from other sources, like coal burning electricity plants. That's the offset, which is done on your behalf.

Adam: You can sponsor a verified, measurable reduction in carbon dioxide emissions by, for example, funding clean energy projects such as wind farms, methane digesters or efficiency projects. At first it may sound like a shell game, but it really works. And it's surprisingly cheap.

 

Car Talk: But, just to be upfront, you guys are making money by being a broker. You're getting people to donate to clean energy, and taking a piece off the top, right?

Adam: Yes, there's nothing mysterious about it. We're a retailer. We buy wholesale, sell to customers, and add enough margin to keep our web servers running. Solar panel makers, wind farm developers, biodiesel manufacturers - all are for-profit enterprises. We think it's a good thing when companies can sustain themselves by providing an environmental service. Climate change is a long-term problem, and we hope to be around for the long term as well.

Tom: Business is a very powerful tool, and to solve the climate crisis we need every tool at our disposal. We imagine a world where everyone does well by doing good.

 

 

Car Talk: That all sounds great. But how much of the cost of the offset actually goes into projects, and how much goes to buying organic Birkenstocks for management, advertising your program, and buying those high-end Priuses with hand-woven India-print seat covers that you guys must be driving?

Adam: We at TerraPass drive biodiesel VW buses created as part of a make-work program for unemployed manatees. The seat covers are hemp.

Seriously, though, retail companies - and that includes carbon offset retailers like Terrapass - generally don't disclose their costs. Instead, we suggest that people look for good value when they purchase offsets. When you buy a pair of jeans, do you ask how much they cost to make? Or do you look for price and quality?

It's easy to compare offset prices, which are measured in dollars per ton of carbon dioxide. It's trickier to assess quality, but you should look for standards such as independent auditing and project verification.

Tom: Our business model is designed to bring to new projects the difference between what they need to get financed and built, and what funding and revenues they have from other sources. That depends on the specific projects, not the market. One example is the Rosebud Sioux Tribe single turbine project. With support from our customers, we contributed about 25% of the cost of the turbine, which was critical to its successful development and the Tribe's ongoing effort to build more wind turbines.

 

Car Talk: Do your companies certify that the offset actually happened?

Adam: Yes. We open up our books to an independent third party, the Center for Resource Solutions. Not only does CRS ensure that we actually meet all of our carbon obligations, they also review our marketing language and require that we make an official disclosure of the projects we fund. We publish an annual verification report.

Tom: An independent certified public accountant confirms that we are providing our customers exactly what they bought. The CPA's report for 2006 will be on our web site shortly, and all of our customers receive a receipt from Clean Air - Cool Planet, our non-profit partner who permanently retires all NativeEnergy offsets. You can check out some pictures of the clean new energy projects our customers have helped build by buying offsets.

 

 

Car Talk: Would that project - and the resulting CO2 offset - have happened without your financial support? It doesn't seem like it's fair to count that as an offset, if it would have happened without, say, Terrapass or NativeEnergy, right?

Tom: There are three groups of projects: Those that were implemented regardless of the potential for offsets' revenues - for example, natural gas power plants that happen to reduce coal power; those that were implemented only because they expected offset revenues to be available year-by-year; and those that can't risk those revenues not being available, and so need their offsets' revenues secured up front on a long-term basis to get financed and built. Only the second and third groups produce bona fide offsets, and we focus on the third group so that our customers can play a direct role in bringing specific new projects on line.

 

Car Talk: Carbon offsetting sounds like a charitable thing to do... but you guys aren't non-profits. So, is the offset tax-deductible?

Adam: Offsets from TerraPass are tax-deductible for businesses, because they are an expense. They are not deductible for individuals.

I do think it's important to stress that offsets are not a donation. They are a purchase of carbon reductions. Certainly the motivation behind people's purchase of them is charitable, and we applaud that. But offsets are also a quantifiable item subject to quality standards, just like other items you can buy. I point this out because I think it's important for people to have a retail mindset when they buy offsets. They should demand a good value.

 

 

Car Talk: What do you say to critics who say this is all just a way to rationalize burning all the fossil fuels we want, and feeling good about it? Using all that oil also still means more air pollution, oil spills and, some would say, certain wars that will go nameless.

Tom: Even Priuses emit carbon dioxide. We all need to reduce our energy use as much as we possibly can. Offsetting is the only way to do something about the energy we can't avoid using, and when the offsets come from truly new projects that offsetting helps build, we are helping to develop a larger, more diverse supply of American energy.

Adam: Carbon offsets are one part of a story that includes conservation, technology, and government action. We should all seek to reduce our carbon footprints by cutting back on the amount of fuel and energy we consume. But we can't cut back to zero, which is why carbon offsets have a role to play.

 

Car Talk: Can we offset Tommy's emissions? Sometimes they're, well, rather noxious.

Tom: Only the methane component is a greenhouse gas. To determine the volume of methane in Tommy's emissions, please have Tommy light each emission over the course of a week, and report to us the number of times there is a blue flame, a yellow flame, or no flame. With a sample, of course, we could have our staff flatulence analysts, Ben Dover and Les Havasnif, do a full chromatographic work up.

Adam: Sounds like Tommy is a Superfund site. We may be able to recommend a good doctor.

 

 

Car Talk: Anything else you'd like to mention?

Adam: A major part of the value of offsets is that they raise your awareness of your own carbon footprint. I encourage people to get started by calculating their footprints from driving, flying and home energy use. Then figure out ways to lower that footprint through conservation. People don't realize how easy it is to conserve. Just by changing your light bulbs, you can save energy and money.

Tom: Global warming is serious, and it is happening now. While voluntary purchases of offsets can play an important role in reducing the threat, we also need a massive international effort to move from a fossil fuel-based economy to a renewable energy economy. Please do everything you can to help get us headed in a new direction, and encourage your representatives in state and federal government to muster and use the political will to make that happen.